APEC Finance Ministers Gather to Address Global Economic Risks

Strategic Insights -

Finance ministers from the 21-member Asia-Pacific Economic Cooperation (APEC) forum gathered on South Korea's resort island of Jeju to discuss potential risks to the global economy, including high oil prices, a real estate bubble in the United States, and growing elderly populations in many societies. The meeting comes at a time when oil prices have been on a sharp rise, with crude oil shooting up to $70 per barrel in New York last week, exacerbated by the effects of Hurricane Katrina. Rising fuel costs pose a significant threat to the global economy, with South Korea estimating that higher oil prices will slash its economic growth for the year by 1 percentage point.

Key Takeaways:

  • The APEC finance ministers will discuss potential risks to the global economy, including high oil prices, a real estate bubble in the United States, and growing elderly populations in many societies.
  • The meeting will focus on policy coordination between oil-producing and oil-consuming states, with the ministers urging an end to fuel subsidies and price controls.
  • APEC's 21 members account for more than half of global oil demand and include four of the world's five biggest oil importers - the U.S., Japan, China, and South Korea.
  • Ministers will discuss excessive rises in U.S. property prices, which have recently reached unreasonable levels, and call for concerted efforts to cope with aging economies.
  • The aging societies' issues, including savings and investment, their impacts on financial markets, and China's currency revaluation, will be covered during the meeting.
  • APEC finance ministers meet once each year to exchange views and share information on economic growth and regional financial developments, issuing a joint statement with policy recommendations for member economies.

Statistics:

  • Oil prices have risen sharply, with crude oil reaching $70 per barrel in New York last week.
  • APEC's 21 members account for more than 56% of the world's gross domestic product.
  • APEC members account for about 46% of global trade.
  • South Korea estimates that higher oil prices will slash its economic growth for the year by 1 percentage point.
  • China's currency, the yuan, was revalued by 2.1% against the U.S. dollar in July.

Sources:

  • "APEC Finance Ministers Gather to Address Global Economic Risks," Asia Pulse, September 7
  • "APEC Statements from Previous Meetings," APEC website